Isme survey shows banks making it more difficult to access finance


Banks have not responded to increased demand for bank finance from small and medium enterprises (SMEs), according to business lobby group Isme.

According to the Isme Quarterly Bank Watch Survey, the number of firms looking for finance in the last three months has increased to 37 per cent from 25 per cent in the same period last year.

However, banks are still turning down one in every two applications, according to the survey. Isme said it was a “slight” improvement from the 52 per cent refused finance in the last survey.

Of the 50 per cent approved for funding, 66 per cent have drawn down the finance either fully or in part; an increase from the 57 per cent in the final quarter of 2011, said Isme. Nine out of 10 firms surveyed by Isme said the banks are making it more difficult to access finance.

According to Isme chief executive Mark Fielding, “The results of today’s survey gives a lie to the banks’ excuses that demand for credit from SMEs is weak. It also confirms the evidence of the recently published Central Bank report and the EU Survey on Access to Finance in the euro area, which stated that Irish SMEs were second least successful, after Greece, in obtaining bank finance. It is obvious that the Government’s instructions to the bailed-out banks to increase access to finance for viable SMEs is being ignored”.

Isme wants the Government to:

 - Increase SME finance availability by insisting on adherence to bank bail-out conditions.

 - Introduce the guarantee scheme, microfinance scheme.

 - Develop an alternative bank – a strategic investment bank to introduce competition.

 - Investigate other sources of finance that can be made available to viable cash starved SMEs.

The survey, conducted in the week ending 9th March, attracted 904 responses, a response rate of 22 per cent, provides a strong indication of the real SME lending environment, excluding agriculture.